Virgin Australia to increase domestic fares as fuel costs climb

“Costs across the aviation sector continue to rise, now significantly exacerbated by the situation in the Middle East. We are making necessary fare adjustments to reflect these cost pressures,” a Virgin Australia spokesperson said.

Fuel is one of Virgin’s largest expense items, and the airline is understood to be facing significant inflationary pressure on both fuel and airport costs.

Qantas has already hiked international ticket prices in response to rising fuel costs, while Air New Zealand is set to cut more than 1,000 flights across the next couple of months; the Flying Kangaroo has also said it will review international fares on a fortnightly basis.

It comes after Transport Minister Catherine King moved on Monday to reassure Australians that short-term jet fuel supplies are secure and that Qantas and Virgin Australia are “well placed” to handle immediate disruptions.

Speaking to reporters on Friday, Energy Minister Chris Bowen said that fuel continues to arrive in Australia, and the country is better-placed to weather the Hormuz crisis than it was to cope with the 2022 Russian invasion of Ukraine.

“Every expected delivery has delivered, and the refineries are continuing to produce at full time. The decision I made and announced, this time last week, to release 20 per cent of our strategic reserve has been operationalised,” he said.

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“I can confirm more than 500 million litres of fuel have been approved for release, and that will have an impact in the immediate future, as well as in the long term.

“I’ve also been very clear that, of course, I think that Australians understand that it does take a little bit of time for those hundreds of millions of litres to flow through to every part of Australia.”

Australia has two on-shore fuel refineries – Ampol in Brisbane and Viva in Geelong – and Minister Bowen said he expects supplies to be secure for at least another month.

“We’ve had indications from all the refiners and importers that we expect, this current situation to continue well into April – that is, that fuel supplies will continue and are locked in, will continue to arrive,” he said.

“Obviously, beyond that late April period, we’re dealing with more uncertainty, depends how the international circumstance rolls out.

“We’re not at the situation where we need to contemplate further measures just now, but we should be contemplating what we might need to do should things worsen, and that is the work that will continue between governments.”

The potential for fuel disruptions has also raised the profile of sustainable aviation fuel (SAF), with Sydney Airport chief executive Scott Charlton telling a bioenergy conference earlier this month that Australia should look to invest more heavily in a sovereign SAF industry.